Owning a home is the American dream. It’s also a way for modern professionals to build wealth over time. Instead of throwing away rent each month on a place you have no control over, purchasing a home allows you to establish equity and build up value as you pay your mortgage each month. When you sell your home, that increased value ends up being more money in your pocket.
In the last twenty years, the price of the average single-family home in Seattle has tripled. That alone could be incentive for some people to consider listing their homes for sale. However, instead of selling your home and moving, you might consider downsizing to a new space and keeping your current home. If you already own a home, it can be a source of income, if you decide to convert it into a rental.
Seattle’s Prices Are Going Up, Which Will Probably Continue
The Seattle real estate market has been the strongest in the country for many months now. Prices continue to climb month after month. In fact, while other markets are just now climbing back to the price range from before the Great Recession, Seattle has already bypassed the highest average prices from 2006 (before the bubble burst) by more than 20 percent.
As job growth and professional migration to Seattle continues, demand for housing will only increase. There are only a few hundred properties available for sale in the city at any given time, meaning that those who buy homes often have to extend their search into another county. For those who already own homes in Seattle, now is a great time to sell. However, selling means you’ll soon be a buyer in a very competitive market. Right now may also be a good time to rent out your property or purchase a home as an investment to rent out to others in the near future.
Rental Demand Is Also Very Strong
While there are multi-unit apartments under construction around Seattle, many modern renters prefer to live in rental homes, not corporate boxes. Duplexes, multi-floor, multi-family buildings and even single-family homes for rent can produce regular income for owners of these buildings. There is a steady influx of professionals into the city, many of whom need a secure rental in the near future. Properties in good condition and popular neighborhoods can fetch premium rental rates.
Generally, rent prices for a space exceed mortgage prices for the same square footage. Tenants will pay your mortgage on a property, with a little bit left over for re-investment, maintenance and profit. Some experts consider Seattle to be one of the cities with the best potential for income on investment properties. A recent article by an industry expert listed Seattle as #6 out of the 80 top cities for passive income.
The increasing home values around Seattle are one of the reasons you can depend on ongoing demand for rental properties. Many people who want to buy simply can’t save the down payment needed or aren’t aggressive enough to successfully bid on a property in a hot real estate market like Seattle’s. These people will continue to rent for the foreseeable future, ensuring that there will be demand for conveniently located, well-maintained rental homes.
Outside Investors See the Potential
A lot of properties in the Seattle area are bought by out of state or even international investors. With the ongoing growth of the city’s economy and limits on potential expansion, the prices for homes and rentals will likely continue to grow for years.
Right now is a great time to expand your income by getting into residential rentals and investment properties. The potential for return on your investment is substantial, as Seattle home values and rental rates will likely continue climbing in the future.